Here’s a conundrum for KPMG Consulting: The firm posts exceptional numbers that point to fiscal responsibility and strong growth potential. KPMG stuffs the pipeline with new business and achieves extraordinarily high utilization rates—benchmarks that analysts use to project long-term viability. From an IPO perspective, such signs also point to good shareholder return.

But the investment community—burned by the “e-volution” of consulting—instinctively wants to lump KPMG into the scrap heap of pure-plays. Analysts who rode the hot e-consultants off the cliff are understandably leery of pumping up another pony that claims e-business excellence.

Exacerbated, KPMG waits for “market conditions to improve” before launching the IPO. In reality, KPMG is waiting for Wall Street cheerleaders to regain the favor of investors who were burned by last year’s hype. Like patient schoolmarms, KPMG executives walk analysts through an abbreviated road show, pausing at the slides that would make many of the flailing e-consultants drool.

For example, KPMG’s client pipeline for Q3 2001 should reach $6 billion. If past history is a good indicator, the firm will score 25 percent of that business. So that’s $1.5 billion right off the top. Also consider that KPMG enjoys roughly 95 percent repeat business among its 150 core clients, and you can see why big consulting firms are often cash-generating machines.

KPMG has adopted a true sales mentality for developing new business. The firm has more than 230 dedicated sales professionals and spurs these folks on with commissions—some earn more than partners (and that’s okay).

There’s more, but suffice to say that KPMG Consulting tells a dramatically different story from the trumped-up hype of last year. When market conditions return to some sense of normalcy, investors will finally see that not all e-consultants are alike.

Heard on the streetChristopher Lochhead, the impassioned chief marketing officer (CMO) at Scient, has been replaced by Pamela Lloyd, who most recently was CMO at ClickThings in New York. Lochhead championed Scient’s revolutionary fervor with aggressive marketing campaigns and sometimes contumelious PR. Lloyd’s experience with the more buttoned-down financial services industry (e.g., Citigroup) certainly offers a different perspective.Inside Consulting is written by Tom Rodenhauser as a free weekly supplement to The Rodenhauser Report. The report informs senior advisors and business executives of consulting trends and best practices. Subscription cost is $295 per year for 10 issues. Copyright 2001, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.